Managing expectations via the agreement schedule

 

Most firms now divide their client agreements into a set of general conditions which are common for all clients, and a schedule which sets out the essential facts and details of the matter.

This works well because (a) each schedule item aligns with the associated field in the practice system, (b) essential information is in a compact space which clients are more likely to read, and (c) it enables reliable matter setup so that the chances of quirky variations are very low.

With that in mind, we can structure the schedule so as to reduce risk inter alia in scope and price.

I advise my clients to set up their general conditions to say that, if any item in the schedule does not apply, then the words ‘THIS DOES NOT APPPLY’ be inserted as mandatory text in the schedule item. In other words, nothing is left silent. This can apply to monies in trust, outlays, and any component of price.

For the scope, I recommend a minimum of two schedule variables… Work Specifically INCLUDED, and Work Specifically EXCLUDED. The benefit is that the practitioner is forced to give some reasonable consideration to the details and write them down (and preferably explain them). It is very challenging to insert ‘THIS DOES NOT APPPLY’ in Work Specifically EXCLUDED. In terms of risk management, it is simply not acceptable to rely on the short matter description (the two or three-word RE:) to set out the scope of work. You might understand what is normal, but your inexperienced clients won’t.

For pricing, I recommend a minimum of two different variables… Fixed Price, and Estimated Price. Each provides a track in your schedule which can be followed through. If you are going down the estimate track, I strongly recommend using a range. It gives all parties more breathing space. It also avoids unintended interpretation of a single figure as a quote.

But – even if you do use a single-figure estimate, having the other schedule variable showing ‘Fixed Price – THIS DOES NOT APPPLY should save you if a misunderstanding occurs.

Remember also that scope and price travel together. This is critical where you have activated a fixed price – so your schedule variable should have standardised text showing ‘This Price applies to the Work Specifically INCLUDED in Item xx’.

Using your schedule to manage risk and expectations will speed up your matter opening and reduce misunderstandings. Many firms don’t do it as well as they could because of the initial effort to set up a few additional system fields.

But overall, the approach is simple, effective, and ties in perfectly with paper-light offices. If your current approach is to have essential matter data lost in the bowels of six pages of general conditions, you should consider giving the schedule approach a go.

It should also go without saying that the suggestions above are not a substitute for understanding the rules on pricing and disclosure in Division 3 of the Legal Profession Act 2007.

Published: Queensland Law Society – Proctor – May, 2017

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